Higher markets on jobless claims data

Dow advanced 188 closing at the highs, advancers over decliners 3-1 & NAZ jumped 45.  The MLP index rose 3+ to the 459s & the REIT index went up 2 to the 273s.  Junk bond funds gained ground & Treasuries pulled back bringing higher yields.  Oil  rose again but gold was little changed.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month	0.07%
U.S. 2-year	0.32%
U.S. 10-year	2.70%

CLH14.NYM

....Crude Oil Mar 14

....97.64

...0.26

(0.3%)

Applications for unemployment benefits fell for the first time in 3 weeks as employers retained workers to meet demand.  Jobless claims dropped 20K to 331K in the latest week, according to the Labor Dept.  The forecast called for a decrease to 335K.  The decline in dismissals shows employers are confident demand for goods & services will hold up at the same time fiscal restraints ease.  A pickup in the pace of hiring & wage growth would help fuel bigger gains in the economy.  The 4 week average of claims inched up to 334K from 333.75K in the prior week.  The number continuing to receive jobless benefits rose 15K to 2.96M in the latest week.  The unemployment rate among people eligible for benefits held at 2.3%.

Jobless Claims in U.S. Decreased 20,000 Last Week


Prudential Financial posted Q4 results that missed the estimates as growth stalled at the intl operation.  The net loss widened to $460M from $203M a year earlier.  Operating profit per share, which excludes the results of policies sold before the firm went public & some investments, was $2.20, missing the $2.23 estimate.  CEO John Strangfeld said PRU gets about half its profit from units outside the US, mainly in Japan.  Costs to bolster reserves weighed on results at the intl business, which reported that profit was unchanged from a year earlier.  Annualized new business  premiums, a measure of sales, fell 38%.  Prudential recorded $1.2B in costs tied to foreign exchange fluctuations, fueled by swings in the ¥.  The Japanese currency weakened 18% last year against the dollar.  But the company said the loss was cushioned by adjustments to other accounts that aren’t reflected in the net income figure.  Adjusted operating profit was $647M at the intl insurance segment, as the Life Planner business recorded costs of $78M to increase reserves.  Results were also hurt by $11M of costs to integrate units bought from AIG.  Annualized new business premiums at the intl units were $683M, compared with $1.1B a year earlier.  Prudential has raised prices for some products & stopped selling one form of life insurance in Japan.  The stock dropped 47¢.
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Prudential Financial Misses Analyst Estimates as International Unit Stalls

Prudential Financial (PRU)

Allstate gained the most since Aug after profit beat the estimates.  Q4 EPS more than doubled to $1.76.  Operating profit, which excludes some investment results, was $1.70 a share, beating by 33¢ the estimate.  Allstate spent 88.7¢ on claims & expenses for every premium dollar in its property & liability unit, compared with $1.02 in Q4-2012.  Catastrophe costs in Q4-2013 fell to $117M from $1.06B.  Q4-2012 included damages from Superstorm Sandy, which struck the East Coast in Oct causing $35B in insured losses industrywide, according to the Insurance Information Institute.  The stock climbed 2.81.
If you would like to learn more about ALL, click on this link:
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Allstate Rallies Most Since August as Profit Doubles, Exceeding Estimates

Allstate (ALL)

Stocks finally had an impressive day, the first of the year.  However fundamentals driving selling this year have not disappeared.  Financial problems around the globe are still weighing on the markets.  While Argentina, Venezuela, Ukraine & Turkey have their troubles, China is the one that worries traders the most.  Today's rally is coming ahead of tomorrow's jobs report for Jan.  The response to that will show if this rally was another case of buy on the rumor & sell on the news.

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Markets climb on bargain hunting

Dow shot up 144, advances over decliners 3-1 & NAZ gained 45.  The MLP index rose 2 to the 458s & the REIT index went up 1+ to the 272s.  Junk bond funds were higher & Treasuries saw selling.  Oil advanced for a 3rd day as applications for US unemployment benefits fell for the first time in 3 weeks.  Gold keeps sloshing around the mid 1200s.

AMJ (Alerian MlP Index tracking fund)

Treasury yields:

U.S. 3-month	0.05%
U.S. 2-year	0.32%
U.S. 10-year	2.69%

CLH14.NYM

...Crude Oil Mar 14

...98.41

...1.03

(1.1%)

GCG14.CMX

...Gold Feb 14

...1,255.00

...2.30

(0.2%)

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The US trade deficit. widened more than forecast in Dec as exports ended a record year on a soft note.  The trade gap expanded 12% to $38.7B, according to the Commerce Dept.  It compared to an estimate of that called for a $36B gap.  Exports showed a broad-based decline after surging in Nov to the highest ever, while imports edged up on rising consumer demand.  US sales of petroleum products to foreign customers climbed to a record in Dec, capping their best year, continuing a drive toward fuel independence as domestic production improves.  At the same time, the economy will probably pickup faster than many of its counterparts, indicating imports will also climb.  For all of 2013, the trade gap narrowed 11.8% to $471B, the smallest since 2009.  Exports decreased 1.8% in Dec from the prior month to $191.3B, as sales of everything from industrial supplies such as chemicals to autos, consumer & capital goods retreated.  The percentage decrease was the biggest in more than a year, taking overseas sales to a 3 month low.  Foreign demand for petroleum product climbed to a record $13.5B in Dec. Imports rose 0.3% to $230B in Dec, reflecting increasing purchases of crude oil & consumer goods such as cell phones.

Trade Deficit Widens More Than Forecast as Exports Decrease


General Motors posted Q4 profit that missed estimates as the automaker lost money in Asia outside of China, faced higher taxes & restructured in Europe.  EPS was 67¢, trailing the 87¢ estimate & compares with 48¢ in the prior year.  While GM had a record year in North America & continued profits in China, it fell short of estimates because of a higher tax rate & restructuring expenses, mostly in Germany, said CFO Chuck Stevens.  “Our view is that sell-side consensus didn’t comprehend that restructuring,” he said.  “The final announcement associated with that wasn’t done until early December and due to that we needed to book some of the restructuring costs, primarily related to the severance portions of that program.”  Intl Operations, which include China, reported that adjusted EBIT fell to $208M from $676M in the prior year.  Excluding China, the unit, which included Middle East operations, lost $200M compared with about $300M in profit a year earlier.  The unit’s Q4 loss excluding China widened from about $125M in Q3.  Revenue rose to $40.5B from $39.3B a year earlier, missing the $40.9B estimate.  North America adjusted earnings before interest & taxes rose to $1.88B from $1.14B.  The estimates called for $1.9B.  Full-year EPS fell to $5.35B from $6.19B in 2012.  “Launches of some of the best vehicles in our history combined with significant improvements in our core business led to a solid year,” Mary Barra, who became CEO this year, said.  The qtr set the stage for the Barra era & underscored the challenges she faces in operating the automaker.  The company expects modest profit gains in 2014 as improvements in operating performance in North America are offset by restructuring costs overseas.  The stock inched up pennies.
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GM Drops as Profit Misses Estimates on Asian Losses, Europe Restructuring

General Motors (GM)

Coca-Cola, a Dow stock, will buy a 10% stake in Green Moutain Coffee Roasters for about $1.25B & work with the maker of Keurig coffee brewers to introduce a system for producing single-serve cold drinks.  KO is buying the 16.7M newly issued shares for about $74.98 apiece.  The move fits into KO’s preferred strategy of taking equity stakes in promising new brands & technologies, such as Zico coconut water & Honest Tea, & helping incubate them.  “This is not a zero-sum game, it just provides more opportunity for our brands,” KO CEO Muhtar Kent said.  KO has the option to raise its stake to as much as 16% during the first 36 months.  The companies are working together on the Keurig Cold single-cup beverage brewer that will be sold in GMCR fiscal 2015.  GMCR will make & sell KO branded pods to go with the machine.  “This is what consumers told us they wanted,” GGMCR CEO Brian Kelley said.  GRCM surged $25 to the 113s & KO went up 53¢.
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If you would like to learn more about KO, click on this link:
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Coca-Cola to Acquire 10% Stake in Green Mountain Coffee for $1.25 Billion

Coca-Cola (KO)

Green Mountain Coffee Roasters (GMCR)

Stocks finally found buyers who felt the markets were oversold.  Even with this gain, Dow is down 1K YTD, not a good year.  Stocks were not meant to go straight up as they have been doing for 5 years & they were not meant to go straight down as they did this year.  Some earnings looked better today & bargain hunters want to keep Dow about the 10% decline mark (under 15K) which would signal a bear market.  The questrion becomes, does this rally have legs?  I have my doubts.

Dow Jones Industrials

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